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Should You Have Franchise Insurance?

Jun 20, 2008
Buying a franchise is a great way to start a new business. Franchises typically have a strong brand built up already, and they take care of the advertising for you. But there are a couple other ways that people use franchising to make money.

One way is by becoming a franchisor. To do this, you start a chain, become successful, then start sell ownership of one of your chains to savvy entrepreneurs. You support the franchisee with advertising, training, materials, and other forms of support and in turn the franchisee pays you a monthly fee for the right to use your brand name.

The third way to make money off a franchise is by suing one for millions of dollars. If you are a franchise owner, then you're probably a bigger target than you think. Having insurance for your franchise is the best way to protect yourself from unscrupulous litigation-happy folks and the ambulance chasing dilettantes that support them.

The First Famous Franchise Suing Millionaire

We've all heard the story:

A woman orders coffee at the McDonald's drive through, spills it on herself, and successfully sues for millions because the coffee was hot.

While the rest of the world looked on in awe as a jury, for reasons to this day are unknown, awarded millions to the woman who brought injury upon herself, the flood gates of suing successful franchises were opened.

It makes you wonder doesn't it? Had McDonald's foreseen this event and cooled off their coffee to prevent a lawsuit, would the lady have sued because her coffee was cold, resulting in mental anguish because she had to throw it out and therefore didn't get her morning caffeine fix and did poorly at work that day?

The unfortunate part of that seemingly impossible scenario is that with the right lawyer and a jury of the incommodiously skulled, she probably could have pulled it off.

Today, franchises in America account for about $1 trillion in annual income. That's a really big target for the guy or gal that is just itching to live the new American dream of suing a franchise.

How Franchise Insurance Protects You

Once you purchase a franchise, you become a business owner. Just like you are responsible for the well-being of anybody who visits you in your home (watch out for the "friend" who lays you up with a lawsuit after slipping on your wet grass), as a business owner you become responsible for the well being of the customers who visit your business.

Should a customer choose to "accidentally" slip and successfully win a million-dollar lawsuit against you, where does that leave you? Well, if you don't have insurance for your franchise, it leaves you in the brink, that's where.

Not All Insurance for Franchises Are Equal

When you are looking at insurance for your franchise business, be sure that it protects you against lawsuits... especially those of a frivolous nature. There are plenty of things that you can do to make your business as safe as possible. However, there is simply no fool-proof method to stop a determined litigation-happy consumer with a team of brain-shrunk jurors and an attack dog lawyer to back him up.
About the Author
All Franchise Insurance (http://www.allfranchiseinsurance.com) is a repository of companies offering insurance for franchise businesses in all states across the U.S. The author, Art Gib, is a freelance writer.
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